Supplemental Security Income

The claimant applied for Supplemental Security Income (SSI) benefits as a
disabled individual. His disability resulted form an accident, which
occurred on June 19, 1980. The claimant has received $95.00 per week in
disability benefits from an insurance company since the date of the
accident. When the Social Security Administration (SSA) determined that
the claimant was ineligible for SSI benefits because his income exceeded
the statutory limit, he appealed. The claimant alleged that he had filed a
third party action against the person he claims was responsible for his
accident. If the claimant is successful in his lawsuit, the insurance
company, which has filed a lien under applicable State law against the
proceeds of any recovery from a third party by the claimant, will be
entitled to recover the full amount of the disability benefits that it has
paid to the claimant. Because of the lien, the claimant contended that the
weekly payments made to him by the insurance company constituted a loan
and thus should not be considered income for SSI benefit purposes.
Held, the payments made to the claimant by the insurance company
did not constitute a loan because, under section 1612(a)(2)(B) of the
Social Security Act (the Act) and 20 CFR 416.1121(a), those payments were
considered unearned income. Consequently, the claimant was ineligible for
SSI benefits because his income exceeded the statutory limit.

The general issue is whether the claimant was eligible for SSI benefits
as defined in the Act. The specific issue is whether the disability
payments made by an insurance company can be considered a loan or must be
counted as unearned income under title XVI of the Act.

The claimant, who became disabled on June 19, 1980, as a result of an
accident, applied for and was determined to be entitled to a period of
disability and Disability Insurance Benefits. He was also found to be
disabled for SSI purposes.

The claimant has been receiving $95.00 per week in disability benefits
from an insurance company since his accident. The insurance company has
filed a lien, pursuant to Section 277 of the New York State Insurance law,
against the proceeds of any recovery from a third party by the claimant.
The claimant and his attorney have stipulated that they have filed a third
party action against the person they claim was responsible for the
claimant's accident. In the event that the claimant is successful in this
lawsuit, the insurance company will be entitled to recover the full amount
of the disability benefits that is has paid to the claimant.

The claimant and his attorney both contended that the weekly disability
benefits paid to the claimant constituted a loan because of the lien. If
the claimant is awarded money damages, the insurance company will be paid
the amount of its lien. Therefore, it is the claimant's contention that
since his disability benefits are subject to repayment if his lawsuit is
successful those benefits should not be considered income and thus he
should be eligible for SSI benefits.

Section 1602 of the Act provides that each aged, blind, or disabled
individual who is determined to be eligible on the basis of income and
resources shall be considered an eligible individual for SSI benefits
under title XVI of the Act.

Section 1612(a) of the Act provides that income means both earned income
and unearned income.

Section 1612(a)(2)(B) of the Act provides that unearned income includes
any payments received as an annuity, pension, retirement, or disability
benefit, including veterans' compensation and pensions, workmen's
compensation payments, old-age, survivors, and disability insurance
benefits, railroad retirement annuities and pension, and unemployment
insurance benefits.

Section 416.1102 of Regulations No. 16 provides that income is anything a
person receives in cash or in kind that a person can use to meet his or
her needs for food, clothing, or shelter. In-kind income is not cash, but
is actually food, clothing, or shelter, or something a person can use to
get one of these.

Section 416.1121(a) of Regulations No. 16 provides that some types of
unearned income are annuities, pensions, and other periodic payments. This
unearned income is usually related to prior work or service. It includes,
for example, private pensions, Social Security benefits, disability
benefits, veterans benefits, worker's compensation, railroad retirement
annuities, and unemployment insurance benefits.

The law and regulations are quire clear and precise in providing that any
disability benefits paid to a claimant are considered unearned income, and
if total countable income (including disability benefits) exceeds the
amount stated in the law, the claimant is ineligible for SSI benefits.
Therefore, SSA concluded that the payments made by the insurance company
to the claimant did not constitute a loan, but were disability benefits,
even though the insurance carrier has a lien against the proceeds of any
recovery from a third party by the claimant. Consequently, the disability
benefits that were paid to the claimant must be counted as unearned income
for SSI benefit purposes. Accordingly, SSA concluded that the claimant was
not eligible for SSI benefits because his income exceeded the statutory
limit.

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